Listed building materials firm proposes to raise £165m

Sheffield-based building materials specialist SIG has announced a proposed capital raise of £165m to strengthen the Group’s capital structure.

As part of the Capital Raise, CD&R – a global investment manager – has agreed to invest up to £94m, with a guaranteed minimum investment of £80m.

The Capital Raise is to be structured through two tranches. This includes a first tranche of £60m being placed firm to CD&R at 25 pence per new ordinary share.

And there will be a second tranche of £105m offered by way of the firm placing and placing and open offer, of which c.£60m is to be raised through the firm placing, and c.£44m is to be raised through the conditional placing.

Net proceeds from the fundraise will be used to improve liquidity, provide further resilience against the effects of the COVID-19 pandemic, deliver SIG’s new strategy and to fund the unwind of various forms of Government relief made available to mitigate the pandemic’s effects.

IKO Enterprises, a company incorporated in Canada, is SIG’s largest shareholder and has confirmed it is fully supportive of the company’s new strategy and the capital raise

The firm placing and placing and open offer are being conducted by way of an accelerated bookbuild process.

Jefferies International and Peel Hunt are each acting as joint bookrunner, joint sponsor and joint financial adviser to SIG. Lazard & Co is acting as lead financial adviser to the company.

Alongside the Capital Raise, SIG says it has agreed with the lenders under its Revolving Credit Facility and the holders of its Private Placement Notes a reset of financial covenants and amendments to other terms and conditions.

This will provide the Group with flexibility to execute its new strategy with a more sustainable financial structure.

In an update on its recent trading, SIG reports: “The Group has seen a gradual improvement in trading performance throughout May and June 2020, particularly in the UK and Ireland.

“Underlying revenue for May showed a steady recovery from its low point in April 2020.

“Although this remained below the underlying revenue achieved in March 2020, the Group’s daily sales at the end of May were largely in line with March levels.

“The improvement in revenues has continued at the start of June with the Group trading in line with pre-COVID-19 levels.

Although the improvement in trading performance is encouraging, this has been influenced by a range of factors, including re-stocking by customers as a result of previously subdued demand.

“It is unclear, given the relatively short period of trading post-lockdown, whether this performance will be maintained going forwards.”